Saratoga Investment (NYSE:SAR) and State Street (NYSE:STT) Head to Head Analysis

State Street (NYSE:STT) and Saratoga Investment (NYSE:SAR) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, analyst recommendations, dividends, institutional ownership, earnings, risk and valuation.

Analyst Recommendations

This is a breakdown of current ratings for State Street and Saratoga Investment, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
State Street	0	6	10	0	2.62
Saratoga Investment	1	4	0	0	1.80

State Street currently has a consensus target price of $190.03, indicating a potential upside of 12.13%. Saratoga Investment has a consensus target price of $19.67, indicating a potential upside of 44.34%. Given Saratoga Investment’s higher possible upside, analysts clearly believe Saratoga Investment is more favorable than State Street.

Profitability

This table compares State Street and Saratoga Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
State Street	15.81%	16.11%	1.00%
Saratoga Investment	-3.35%	8.66%	2.78%

Dividends

State Street pays an annual dividend of $3.68 per share and has a dividend yield of 2.2%. Saratoga Investment pays an annual dividend of $3.00 per share and has a dividend yield of 22.0%. State Street pays out 30.0% of its earnings in the form of a dividend. Saratoga Investment pays out -1,200.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. State Street has increased its dividend for 13 consecutive years. Saratoga Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares State Street and Saratoga Investment”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
State Street	$22.63 billion	2.04	$2.94 billion	$12.25	13.83
Saratoga Investment	$125.71 million	1.69	$36.60 million	($0.25)	-54.50

State Street has higher revenue and earnings than Saratoga Investment. Saratoga Investment is trading at a lower price-to-earnings ratio than State Street, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

87.4% of State Street shares are owned by institutional investors. Comparatively, 19.1% of Saratoga Investment shares are owned by institutional investors. 0.3% of State Street shares are owned by insiders. Comparatively, 10.6% of Saratoga Investment shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility & Risk

State Street has a beta of 1.38, suggesting that its stock price is 38% more volatile than the S&P 500. Comparatively, Saratoga Investment has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500.

Summary

State Street beats Saratoga Investment on 12 of the 17 factors compared between the two stocks.

About State Street

State Street Corporation, through its subsidiaries, provides a range of financial products and services to institutional investors worldwide. The company offers investment servicing products and services, including custody, accounting, regulatory reporting, investor, and performance and analytics; middle office products, such as IBOR, transaction management, loans, cash, derivatives and collateral, record keeping, and client reporting and investment analytics; finance leasing; foreign exchange, and brokerage and other trading services; securities finance and enhanced custody products; deposit and short-term investment facilities; investment manager and alternative investment manager operations outsourcing; performance, risk, and compliance analytics; and financial data management to support institutional investors. It also engages in the provision of portfolio management and risk analytics, as well as trading and post-trade settlement services with integrated compliance and managed data. In addition, the company offers investment management strategies and products, such as core and enhanced indexing, multi-asset strategies, active quantitative and fundamental active capabilities, and alternative investment strategies. Further, it provides services and solutions, including environmental, social, and governance investing; defined benefit and defined contribution; and global fiduciary solutions, as well as exchange-traded funds under the SPDR ETF brand. The company provides its products and services to mutual funds, collective investment funds, UCITS, hedge funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments, and investment managers. State Street Corporation was founded in 1792 and is headquartered in Boston, Massachusetts.

About Saratoga Investment

Saratoga Investment Corp. is a business development company specializing in leveraged and management buyouts, acquisition financings, growth financings, recapitalization, debt refinancing, and transitional financing transactions at the lower end of middle market companies. It structures its investments as debt and equity by investing through first and second lien loans, mezzanine debt, co-investments, select high yield bonds, senior secured bonds, unsecured bonds, and preferred and common equity. The firm prefers to invest in aerospace, automotive aftermarket and services, business products and services, consumer products and services, education, environmental services, industrial services, financial services, food and beverage, healthcare products and services, logistics, distribution, manufacturing, restaurants services, food services, software services, technology services, specialty chemical, media and telecommunications. It seeks to invest in the United States. The firm primarily invests $5 million to $50 million in companies having EBITDA of $2 million or greater and revenues of $8 million to $250 million. The firm prefer to take a majority stake. It invests through direct lending as well as participation in loan syndicates. The firm was formerly known as GSC Investment Corp. Saratoga Investment Corp. was formed on 2007 and is based in New York, New York with an additional office in Florham Park, New Jersey.